I’ve always been keen to ignore the latest online biz “shiny object”. However, I couldn’t ignore Amazon FBA. So here’s an introduction to selling physical goods on Amazon and how to become an Amazon seller.
I always said I’d never get involved in physical goods or niches I didn’t have a deep attachment to or wasn’t expert in. I’ve broken all my golden rules by pursuing Amazon FBA. But it’s listed as one of my business goals for 2016 so I’m going for it!
Why? Selling on Amazon has reportedly seen people hitting five figures within the first few months. For early adopters and those who were quick to take action, stories of six figure months and million dollar exits are not uncommon.
But it’s not all about the money. There are a number of other reasons why I want to be successful with Amazon FBA:
- My passive income from digital products seems to have levelled out so I would like to try something else
- I want to help you, my visitors, and by showing you another passive income stream I will do that
- I’m excited to create and grow a new brand which is unconnected to RobCubbon.com
But what is Amazon FBA?
Amazon FBA stands for Fulfillment by Amazon.
Almost anyone can list a product for sale on the Amazon marketplace. This is true whether it’s a product you’ve created yourself, an old item you no longer want, or something you’ve bought in bulk from a wholesaler. When listing a product, you can choose to either send it out to the customer yourself, or get Amazon to do it or “fulfil” it. This is FBA.
The FBA service allows you to store your inventory in Amazon’s warehouses. Amazon will then pick, pack, and ship your products to your customers. They also take care of receiving orders and dealing with returns, making the whole process almost entirely hands off. Amazon charges a fee for this service – $39.99 a month (+ additional selling fees). It’s a fee that many are happy to pay. 🙂$39.99 a month to sell on Amazon?! Why many people are happy to pay this fee right now. Click To Tweet
Why being an Amazon FBA seller is so popular right now?
I was seduced by making money online because I loved the digital space.
I’ve done everything: offering online services such as copywriting or website design for clients; starting a blog; creating digital products such as e-books or online courses. I loved the low barriers to entry digital business offers. It’s all about bootstrapping, avoiding high startup costs, and embracing the new digital economy.
Selling large quantities of physical products seemed so last century to me. However, although the opportunities for working in the online economy continue to grow, a third way has emerged: One that leverages advances in communications and retail technology to bring a traditional business model into the digital age.
Now you can order a product from China, have it shipped to a warehouse in the USA, list it for sale on one of the world’s largest e-commerce stores with delivery to the customer taken care of, all from the comfort of your laptop.
A digital product such as an e-books or online courses are cheap to produce and deliver compared to physical products. But, when you take into consideration the millions of shoppers Amazon can instantly attract to your product, it’s easy to see the opportunity.
Different ways for an Amazon FBA seller to make money
Most types of product can be listed for sale on the Amazon marketplace.
This could include clearing out all of the old books and DVDs from your house and shipping them off to Amazon to be listed.
The next level up would be hunting for deals at local stores or online shops, and then purchasing items that are sold for more money on Amazon. This form of “retail arbitrage” has become profitable for many and can be a great way to get started with Amazon FBA.
However, where the real money is made, as well as the opportunities for creating a truly scalable business that could be sold on later is by creating your own product and listing it for sale on Amazon. This is also called “private labeling”.
Finding products to sell on Amazon
Spending your time searching for deals online or running around your local stores trying to find bargains that can be resold on Amazon might sound like a world away from creating your own product. However, as many successful Amazon FBA sellers have shown, creating a product doesn’t mean inventing the next iPhone.Why private labelling through Amazon FBA opens up a whole world of business opportunities Click To Tweet
Instead, the easiest way to create your own product is to find an existing best-selling item and add your own branding to it. This is called private labelling and, by combining this practice with selling through Amazon FBA, a whole world of business opportunities suddenly opens up.
How does private label selling work on Amazon FBA?
If you’ve got an idea for a brand new physical product that will disrupt an entire industry, as well as the money to launch it, then great. But the well-trodden path to success with Amazon FBA is more straightforward.
Typically, the private label Amazon FBA seller goes the following route:
- Identifying a product that is already selling well
- Finding a supplier of a similar product through a website like Alibaba.com
- Creating a brand name and applying it to the product
- Tweaking or adjusting the product to make it better than the competition
- Ordering a samples of the product
- Shipping the product to Amazon for sale through their FBA service
- Creating a product listing in Seller Central
This leaves out some other important steps, such as financial analysis, negotiating with suppliers, ordering samples, dealing with shipping, customs and importing, driving traffic to your listing, plus much more. However, it’s a brief overview of what might, at first, seem like a daunting process.
Starting out with a small order of a low cost item can be less expensive than you might think. Then, once you understand the process, you can start scaling up to larger orders of more expensive products.
Once you’ve found a product that sells and a supplier you can trust, selling physical products can be an amazing location independent, lifestyle business.
What are the downsides of starting an Amazon FBA business?
No business is without its downsides and one of the biggest here is startup costs. Unlike creating a digital product, you will need to invest in inventory from the outset. Then there’s the shipping costs, as well as the myriad of online tools that you’ll want to invest in. So far I’ve purchased MerchantWords, JungleScout Pro, Amasuite, AMZtracker and ZonBlast.
With most manufacturers only accepting orders over a certain quantity, even the cheapest of items can require a significant financial outlay. You could be looking at anything between $500-1500 to get started with your first product.
Another downside is that as the FBA service becomes well-known, the Amazon marketplace will get more competitive. Whether you are scouting for deals in your local malls or trying to find a product to private label, there are certainly less opportunities than there were even a year ago.
It’s also worth pointing out that there’s always a risk when putting all of your eggs in one basket, which in this case with Amazon. Just like websites that depend on Google for traffic, or freelancers who rely on a single client, if Amazon changes its rules, shuts down their FBA service, or bans your account, you’re in trouble.
However, with more and more people shopping online every day, if you can find the right product, who’s to say you can’t build a truly location independent, passive income business that could be sold further down the line?
How do you become an Amazon seller?
Are you thinking of looking into this business opportunity? If so, here’s some of your first steps:
- It’s best to do this through a private company – so, if you haven’t already, set up a company in your country
- Sign up for a seller account Seller Central with a new login (you can use your current Amazon login but it’s unadvisable)
- Pay Amazon $39.99 a month (+ additional selling fees) from a credit card
- Search Alibaba for products you want to sell
There’s a lot more to it than that, of course. Finding a product that will do well is key – I’ll be writing more on this subject in future.
Two excellent podcasts to get you started:
I’ve listened to nearly every episode of these two podcasts and join their respective Facebook groups which are also a source of great information. I would join their email lists too.
How to become an Amazon FBA seller: You can do it!
Why not look around your house and see what old books and other items you can find that you no longer want. Or maybe take a trip to the stores and look online and see if you can find any discounted products that are selling for much more on Amazon.
Don’t forget to factor in fees and shipping costs. But if you do find an opportunity, you could be selling on Amazon within the week.
For those that are more adventurous, why not have a look on a site like Alibaba.com and see if you can spot any products that are selling on Amazon. You might be surprised at the margins on offer for the very same products that are listed through Alibaba.com for pennies and being sold on Amazon for much more.
What do you think of Amazon FBA? Would you like to dip your toes in the water? What do you think about me doing it? Please share your thoughts in the comments below.